Stimulus dollars drive demand for consultants

Posted: Thursday, March 03, 2011

Editor’s note: This is part two of a four-part series by the Hechinger Report, a nonprofit news organization focused on producing in-depth education journalism. The Empire’s Sarah Day contributed to this project.

The flood of federal stimulus money into the nation’s public schools has dramatically increased the demand for education consultants, leaving some stimulus recipients struggling to find seasoned advisors and others uneasy about the pitches they are getting.

The frenzy was caused by the unprecedented size and scope of the nearly $100 billion federal effort, which began two years ago. That has stirred up great expectations among policymakers and the public. Faced with nerve-wracking timelines, their own bold promises and a dearth of in-house expertise, states and school districts have anxiously sought advice on how to demonstrate progress and avoid missteps.

“Some are calling it ‘No Consultant Left Behind,’” says Frederick M. Hess, director of education policy studies at the American Enterprise Institute, a conservative think tank based in Washington, D.C.

There are consultants who know data, consultants who say they can revitalize struggling schools and consultants who write grants that lead winning states and school districts to hire other consultants. They work at nonprofits, universities and textbook giants like the British-based Pearson PLC, a huge educational publishing concern. A good many are former state commissioners or district superintendents who have parlayed their expertise into lucrative jobs as education experts.

Many of them were present at a downtown Washington, D.C., hotel conference room in December to assist state education officials who won grants in the $4.3 billion Race to the Top competition, or RttT, the best-known element of the stimulus effort. The officials had come to learn about state-of-the-art reform strategies for using sophisticated data-tracking to link teacher evaluations to student achievement. Most of the recognized experts in the field were there—all half-dozen of them.

“There’s a sense of confusion and anxiety,” says Scott Joftus, director of the Race to the Top Technical Assistance Network, a stimulus-funded contractor tasked with aiding states and districts in implementing their bold plans. “There’s a general acknowledgement that there are a handful of people with the expertise to implement assessments related to teacher evaluation—maybe seven or eight people in the country.”

The scramble reflects the scope of the states’ ambitions. “There’s a lot of money being thrown into the system at the same time to create changes that have never been done before,” Joftus says. “States have promised a ridiculous amount of change.”

Many states are just beginning to sign contracts for outside help. Those that have made consulting deals seldom have guarantees. It is the rare contract that comes with a promise of increased student achievement in exchange for services.

And lately some state education officials have grown skeptical of some of the proposals they are fielding.

Leslie Wilson, assistant state superintendent for assessment in Maryland, estimates about 38 percent of the $125 million in RttT funds that her state received will flow through her office, with much of it going to build a new system for collecting student data. She says representatives of nonprofits, for-profit companies, colleges and universities have gone to great lengths to try to talk to her about related contracts. They have called her, e-mailed her and approached her at conferences. Some have enlisted mutual friends to intervene. One vendor asked the state superintendent of education to persuade Wilson to schedule a meeting.

She says she has warned them all to stay away because she believes such conversations will disqualify consultants from bidding on stimulus-funded technology contracts.

“They understand, but they don’t want to abide by it,” adds Wilson, who describes the parties involved as “people who you have never heard of and people who should know better.”

The phenomenon may be even more pervasive in the market for turning around failing schools, which received a $3.5 billion jolt from the stimulus program known as the School Improvement Grant fund. Just a few years ago, there were few consultants even marketing themselves as turnaround experts.

With the stimulus, U.S. Department of Education Secretary Arne Duncan has said he wants to transform thousands of schools in the bottom five percent in performance over the next few years. That’s a tall order. Schools in the bottom five percent are places where fewer than one in three students read at grade level, the dropout rate is more than 50 percent and there are enough disciplinary issues to make them feel like armed fortresses. In the landscape of school reform, they are like the Middle East: constantly fought-over, subject to countless “solutions” that come and go and, in the end, stubbornly resistant to change.

That metaphor is an apt one for the market as well. In the fall of 2009, Joftus was contacted by a former contractor who was working for Global Partnership Schools, a new school turnaround venture funded by GEMS Education, a Dubai-based company founded by entrepreneur Sunny Varkey. The caller was hoping to obtain copies of Joftus’ contract for school improvement services in Kansas.

“You know we’re in a new era when school turnaround firms in the U.S. are being funded out of the Middle East,” Joftus said. “To me, that says there’s money to be made. I call this period the Wild West in education.”

Joftus is not questioning the organization’s credentials or quality. By all accounts, Global Partnership has experience on its side. It is run by Rudy Crew, a former chancellor of the New York City schools, and Manny Rivera, a former superintendent in Rochester, N.Y. Also, it backs its promises with a rare performance guarantee: Its contract with Pueblo, Colo., states that the partnership will only be fully paid if it succeeds in significantly boosting student achievement. Up to 20 percent of its $1.5 million fee is linked to a series of benchmarks geared at overhauling Pueblo’s schools.

“Within 12 to 18 months, there’d better be gains, or if I were a district I’d raise some serious questions,” Rivera said. “There traditionally hasn’t been that kind of accountability in the field.”

The aggressive competition and hoopla behind the big grant competitions make some in the field uncomfortable. School turnarounds are notoriously hard to accomplish and harder still to maintain. Revitalizing schools that have become dropout factories typically means replacing the principal and a large number of staff, as well as installing tough discipline and a new curriculum. Such efforts also require creating a new culture where high expectations are the norm.

“Very few people understand what a turnaround takes,” said Josh Edelman, deputy chief of innovation for the Washington, D.C. schools. “What people expect is that you’re going to see magic. Most of these schools have been failing for years. They’re not going to turn around on a dime.”

Sandra Abrevaya, a spokeswoman for the U.S. Department of Education, said the department is hopeful that its investment will help build expertise in turnarounds and other tricky areas, adding she is “encouraged” that states and districts are beginning to share their knowledge. “While there is a need for more experts in the field, we’re very optimistic that states will build this capacity and that more high-quality organizations will emerge to assist them,” she said.

The difficultly of the tasks at hand and the relative lack of supply make education-consulting a lucrative enterprise. Those in the field say it is typical for an individual expert to make between $1,500 and $5,000 a day, depending on one’s level of expertise. In Ohio, more than half of the state department of education’s $194 million share of RttT funds will be awarded to “external providers,” according to state documents.

The money has attracted big names and powerful organizations that typically haven’t played in the education sphere. Michael Barber, education adviser to former British Prime Minister Tony Blair, heads the global education practice of McKinsey & Company, a consulting giant that helped several states write RttT applications.

In November, Rupert Murdoch’s News Corporation paid $360 million for a 90-percent share in another company that helped consult for the RttT competition, Wireless Generation, a Brooklyn-based education technology firm. Wireless Generation’s involvement in the competition was not without controversy. Despite being paid more than $500,000 by New Jersey, the company failed to catch an erroneous last-minute change to the application. That cost New Jersey crucial points in the competition, leading to an 11th-place finish — just out of the money. Bret Schundler, New Jersey’s state education commissioner at the time, took responsibility for the error and was fired. Wireless Generation officials have not commented publicly on the error, which is the subject of several state investigations. Some legislators have blamed Wireless Generation for not noticing the error, and have asked the company to return its fee.

Just how important is a good consultant? Ask Jennifer Vranek, founding partner of Education First, a Seattle-based consulting firm. Her company was behind the successful RttT applications for Hawaii, Maryland, Ohio and Tennessee — one-third of the winners.

“If nothing else, a consultant has the ability to focus exclusively on the application, unlike the typical state education official, who has 75 other things to focus on,” she says. “A good consultant makes a difference.”

She insists the job involves more than spin. In RttT, states were pushed to make bold promises in their grant applications. Part of the job of the consultant, she says, is to ensure they deliver. Education First cajoled the state leadership in Maryland to commit to overhaul its longitudinal data system, which cannot currently link student test data to individual teachers or track the learning growth of an individual student over time.

The federal government’s stimulus effort was designed to persuade states to take on such complex improvements. Convinced they have an important role to play, many consultants fear that in a time of severe economic distress, there will be less patience than usual for the missteps that inevitably accompany innovation.

“If we get 50 percent of this right, I think that’s a success,” says Joftus, the RttT technical assistance director. “My concern is that the public will see this as a 50 percent failure rate. If that happens, there’s going to be a huge backlash.”